AmSurg Corporation (NASDAQ:AMSG) is a hospital operator that owns surgical centers throughout the U.S. As of December 31, 2009 AMSG had 202 ambulatory surgical centers in 32 states, and one center under development. These centers focus almost exclusively on gastroenterology (studies of intestines) and ophthalmology (studies of eyes), which have higher proportions of senior patients than other specialties. Because of this, AmSurg is positioned to benefit from the aging of the US population - the number of US residents over 65 years old is growing so swiftly that it is on pace to double in the next 32 years.
Ambulatory surgical centers (ASCs) are healthcare facilities that specialize in providing surgical, pain management and diagnostic procedures in an outpatient setting.AmSurg is the largest US operator of ASCs, holding 3.6% of the market by volume. AmSurg is the only operator of ASCs to focus on gastroenterology and opthamology. Its primary competitors are hospitals located close to its facilities; like other operators of ambulatory surgical centers, the firm benefits from lower overhead because its centers do not provide services such as emergency care and intensive care units, which account for much of the overhead in traditional hospitals.
Lower costs allow ASCs to charge patients lower prices than hospitals for identical procedures, leading insurers to encourage their policyholders to choose its facilities. For instance, the Medicare program saves approximately $464 million each year due to the utilization of ASCs by its beneficiaries; patients benefit as well - a procedure in an ASC can save as much as 61% in patient copayments.
AmSurg acquires and develops ambulatory surgical centers in partnership with physicians, typically retaining a 51% or higher majority ownership stake in the facilities. Most of the firm's ASCs are single-specialty sites located inside or adjacent to a physician group practice and performing a limited array of high-volume, low-risk, outpatient surgical procedures, such as colonoscopies and cataract surgeries.
AmSurg receives all of its revenues from the fees it charges patients for the procedures; these, in turn, are largely funded by third-party reimbursement programs such as government and private insurance. The firm grows primarily through acquisitions, though it also develops new ASCs.
In 2009, AMSG earned a total of $669 million in total revenues. This was a significant increase from its 2008 total revenues of $601 million. Unsurprisingly, this had a positive effect on AMSG's net income. Between 2008 and 2009, AMSG's net income increased from $47 million in 2008 to $171 million in 2009.
AmSurg operates as one business segment, since its centers all carry out similar functions and are administered on a centralized basis. However, it is possible to distinguish among the firm's facilities based on each center's surgical sub-specialty. The majority fall into one of three areas: gastroenterology, ophthalmology, and orthopedics.
These centers perform colonoscopies and other endoscopy procedures.
Ophthalmology centers perform cataract procedures and retinal laser surgery.
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AmSurg is the largest operator of ambulatory surgical centers in the United States, and the only one focusing primarily on single-specialty centers in the areas of gastroenterology and ophthalmology. As such, its primary competitors are hospitals, where patients can get the same procedures that AmSurg's centers provide.
Approximately 65% of the 4900 total ambulatory surgery centers are single specialty; among these, approximately 2,000 operate in one of the same specialties as AmSurg's centers. The industry is highly fragmented - no firm holds more than 4% of the market.
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